Question

During 2017, Durham Manufacturing expected Job No. 51 to cost $300,000 of overhead, $500,000 of materials, and $200,000 in labor. Durham applied overhead based on direct labor cost. Actual production required an overhead cost of $295,000, $570,000 in materials used, and $220,000 in labor. All of the goods were completed. What amount was transferred to Finished Goods?

Answer 1

The question calculates the cost to be transferred to Finished Goods by adding the actual labor, materials, and overhead costs, resulting in a total of $1,085,000 for Job No. 51.

Step-by-step explanation:

The question asks for the amount transferred to Finished Goods when actual costs differ from expected costs. To calculate this, we need to add up the actual costs of labor, materials, and overhead that were incurred during the production process. The sum of these costs is the total manufacturing cost that will be transferred to the Finished Goods account.

The actual costs were:

• Labor Cost: $220,000
• Materials Used: $570,000
• Overhead Cost: $295,000

Adding these together, the transfer to Finished Goods would be:

Labor ($220,000) + Materials ($570,000) + Overhead ($295,000) = $1,085,000